September 16, 2011
Authored by: Barry Hester and Bryan Cave
On September 14, 2011, Treasury announced additional disbursements under the Small Business Lending Fund (SBLF). Total funding through the date of this release totals $2.38 billion to 191 institutions. This is not even 10% of the $30 billion authorized under the program. Treasury has stated in a whitepaper that 932 institutions ultimately applied for $11.8 billion in SBLF funding and that, as of September 1, it had issued preliminary approvals to all eligible and qualified applicants, 382 institutions in all for a total of $4.3 billion. Best case, then, Treasury expects to utilize only about 14% of the total SBLF pot but one-third of the funds requested.
The figures in Treasury’s whitepaper suggest that there will be a rash of SBLF closings in the next ten days. Under its enabling legislation, all SBLF disbursement must be made by September 27. The number of disbursements to date (191) is exactly half of the number of outstanding preliminary approvals (382). This will continue in dramatic fashion the exponential increase in the number of closings since the first wave (June (4), July (39), August (87), and September to date (61)).
The program remains a boon for Pennsylvania, home to the greatest number of SBLF recipients (16 institutions taking in an average of $10.4 million, eight of which used SBLF investment to redeem TARP funds). California, Illinois, and Texas each host 13 recipient institutions. By dollar amount, Illinois entities have enjoyed the most SBLF investment ($173 million, including the largest single investment under the program, $72.664 million to TARP-participant First Busey Corporation, parent to Busey Bank, Champaign, IL). Forty-one institutions in the Southeast have received funding so far (Alabama – 3, Arkansas – 3, Florida – 9, Georgia – 3, Louisiana – 5, Mississippi – 1, North Carolina – 3, South Carolina – 3, and Tennessee – 11).
The top twenty-five SBLF recipients have received $800 million through the program. Twenty-one of these (84%) used SBLF investment to redeem TARP funds and received an average injection of $38 million. While in all, 89 of the 191 SBLF recipients thus far (47%) have used this capital to redeem TARP funds, these recipients have received 63% of the dollars disbursed under the program.
One hundred and eleven, or 58%, of recipients to date have received individual disbursements of $10 million or less, averaging $5.28 million each. Only one-third of these smaller recipients used SBLF investment to redeem TARP funds.
As we have noted, recipient institutions have been well-capitalized and have generally had NPAs between 1-3%. Only time will tell whether SBLF investment into such institutions will translate into increased small business lending and job creation.